One of Europe's most popular budget city break destinations is taking drastic action to protect its local communities from the pressures of mass tourism. Budapest, the Hungarian capital famed for its thermal baths and vibrant nightlife, will implement a landmark ban on short-term tourist rentals in its historic core from the start of 2026.
The Heart of the Ban: District VI Goes First
From New Year's Day 2026, Budapest's historic District VI, known locally as Terézváros, will become the first area in Hungary to enforce a complete prohibition on short-term tourist rentals. This desirable central zone, often dubbed 'Budapest's Broadway', is home to iconic landmarks including the grand Andrássy Avenue and the Hungarian State Opera House.
The decision follows a public consultation where a majority of residents voted in favour of the restriction, a result later confirmed as legally binding by Hungary's Supreme Court by the end of 2025. The ban will apply to listings on major platforms like Airbnb and Booking.com, though traditional hotels will remain unaffected.
Addressing a Crisis in Affordable Housing
The primary driver for the new policy is the severe impact short-term lets have had on the local housing market and community fabric. In District VI, approximately eight per cent of all apartments were listed as short-term rentals. This concentration contributed to a dramatic rise of more than 10 per cent in local rents within a single year, pricing out permanent residents.
City authorities state the ban aims to restore affordable housing for residents and bring a sense of stability back to its historic neighbourhoods. The problem is exacerbated by visitor patterns, with tourists often focussing on a few central areas, leading to overcrowding and disruption for those who live there.
Wider Context and Mixed Reactions
Budapest's move aligns with a growing trend across European capitals grappling with similar issues. Cities like Amsterdam, Barcelona, and Berlin have already introduced various restrictions. Notably, Barcelona plans to ban new short-term rental licenses by November 2028 to address its housing crisis, a policy backed by Spain's Constitutional Court.
The European Commission has acknowledged that short-term rentals contribute to a housing 'social crisis' and is planning EU-wide legal measures to ensure more long-term housing is available.
Reactions in Budapest are divided. While many locals welcome the relief, others fear the financial fallout. The city expects an annual loss of around 750,000 euros (approximately £659,636) from the policy. Critics argue for more balanced alternatives, such as stricter regulations, rather than an outright ban.
The decision will notably affect British visitors, with around 700,000 Brits travelling to Hungary each year, many of whom choose Budapest for its value. On average, a significant 40 per cent of tourists in Budapest stay in a holiday rental, far higher than the European average of 28 per cent.
